The data delusion

25/07/2019

We’ve now had about a decade of the “big data” craze.

Data, we have learned, is the answer. It’s the ultimate competitive advantage. It doesn’t lie. The business of the future will be “data driven”. Businesses are obsessed with collecting our data, believing that if they get enough of it, the solution will surely present itself within it, like a fortune in the tea leaves.

Up to a point this is true. Certainly one can, in principle, learn a lot from data. But I’d say if we were to look at the trend on a macro level, the availability of data has probably done more harm to good to the decision making process. We’ve become like the underpants gnomes of South Park – whose plan is to collect as much underwear as possible, assuming that eventually they’ll figure out a way to monetise it (see the above image for their formula…).

How did this happen?

Well, it’s all built on a foundational misunderstanding. We know, quite rightly, that to solve a problem or develop a strategy, we need evidence for our decisions. Something to back us up. We’ve always known this. The problem is that data has become so prevalent that we’ve started to believe that it’s the only viable form of evidence – rather than the truth, which is that it’s simply one of many forms of evidence. We’ve mistaken the part for the whole. We’ve suffering form what might be called “data blindness”, whereby our focus on data prevents us from seeing everything else.

Let’s say you’re trying to develop a strategy for a soft drinks brand. You need to gather evidence, the facts on the ground, in order to come up with a hypothesis. To be sure data will be an important part of that – sales data, consumer research, etc. But there are various other non-data forms of evidence that are equally if not more important.

For example:

The characteristics of the product. What are its attributes? Its strengths and weaknesses? What is it good for? What is it bad for? This is pretty important non-data information, which sounds obvious, but, bizarrely, is often given little attention.

The dynamics of the market. What other products are there out there? Where does this product fit? What appears to be lacking as things stand? What are the norms that seem essential? What are the norms you can subvert?

The biases of the retailers. What are they into right now? What buttons do you need to push to get them to stock your product?

The preferences of the founders. Where is the heart of the people who have to run this thing day in day out? What kind of company do they want to run? What do they believe in? What will they get behind?

I could go on, but you get the picture. This type of stuff is both useful and crucial to decision making but does not take the shape of data. The world is full of people digging deep into the data but ignoring the reality right in front of their eyes.

I suppose it’s our bias in favour of numbers that has seduced us here. “Smart” people bow to numerical information due to its supposed objectivity – which is a nonsense of course because numbers aren’t always objective, and nor is non-number information always subjective. Numbers, in reality, are simply a way that we can absolve ourselves of responsibility for our decisions. Numbers don’t lie, therefore if I do what they tell me I haven’t taken a risk, I can’t be made culpable for the outcome. Just as “nobody ever got fired for hiring IBM”, nobody every got fired for doing what the data told them.

Its just too bad that the data alone rarely tells you anything.

So let’s stop talking about “data” and broaden the conversation. Worship at the altar of “evidence” instead. It includes data within it, but it has so much more besides, and provides the texture and subtlety to make genuinely smart decisions.

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